Which One of the Following Statements Is Correct

question 47

Multiple Choice

Which one of the following statements is correct?

• A)The underwriters must approve any increase in the authorized number of shares for a firm.
• B)A prospectus must be provided to all investors who purchase shares of a new equity offering.
• C)The corporate CEO has the authority to authorize additional shares of stock for a new issue.
• D)When issuing new securities,the first step is the distribution of the prospectus.
• E)Written offers can be made for new securities during the waiting period.

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Definitions:

Economies of Scale

The cost advantage that arises with increased output of a product, as the fixed costs are spread over more units of production.

Adam Smith

An 18th-century Scottish economist and philosopher, best known for his theories of the free market and the "invisible hand" guiding economies.

Diseconomies of Scale

Diseconomies of scale occur when a firm's costs per unit increase as it produces more units, due to inefficiencies.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.